Mark Pauly on (Intra)class warfare

The other day I noted a seemingly bizarre inconsistency in Mark Pauly’s 1995 analysis of why the Clinton health reforms failed politically. I didn’t say, and don’t believe, that Pauly’s endorsement of the inconsistent political explanations was designed to promote a given ideological viewpoint. True, he seemed eager to discount the extent to which monied interests influenced the debate over health care. But at least he was willing to draw attention to those interests in the first place. That said, the following passage from the same text seems much less benign:

I hasten to add that this is not my own personal preference; I would prefer more redistribution. But I realize that I am being out-voted by other middle-class people who do not want to play more taxes. Indeed, I strongly suspect that a major blow to bipartisan health reform was the success of the president’s budget plan, which sopped up (and then some) any surplus willingness of the upper middle class to pay more taxes. We could have had universal insurance coverage or a lower budget deficit, but not both.” (Mark Pauly, “The Fall and Rise of Health Care Reform: A Dialogue,” 1995, p. 12.)

Here Pauly is claiming that it was the “upper middle class” who felt the brunt of the 1993 Clinton tax increases. This made them less willing to pay for health reform. Is this explanation plausible?

No, it is not.

According to economist Robert Pollin, the 1993 Clinton tax increases “increased the levy on [family] incomes over $140,000 from 30 to 36 percent, with an addition 10 percent surcharge for incomes over $250,000″ (p. 26). And according to the Center on Budget and Policy Priorities, these families had incomes in the top 5% of the national income distribution.

Here is a graphic from a report by the Federal Reserve Bank of Cleveland that shows the increase in taxes for families at different income levels:

Given that the the median family income was 54,369 in 1990, and given that only families in the top 3-4% (those above $200,000) really saw an appreciable increase in taxes, it seems to me quite inaccurate to say that the “upper middle class” paid for these increases. One might therefore think that the (upper) middle class should have been willing to pay higher taxes in order to finance universal health insurance for their fellow class-mates. That’s one way to look at it. Another way is to note that ostensibly non-ideological analyses misrepresented the nature of the tax increases, and thereby led the middle class to think their taxes had gone up. The point of such analyses, of course, would be to kill the increases politically. And the main reason one would want to do that is so that the rich would not have to pay higher taxes.

So I am beginning to question the sincerely of such Pauly pronouncements as, “I hasten to add that…I would prefer more redistribution.” That said, I’m still learning a ton from reading and re-reading Pauly’s latest book.